I spent the wee hours last night watching “Insidious 2” (not as scary as “1,” and too confusing to watch while composing ethics blog posts), and, to fend off nightmares, the Wayans’ “A Haunted House” (sillier, grosser and not as funny as their two “Scary Movie” efforts). Naturally, this set me wondering about the ethics of selling a haunted house to an unaware buyer.
I thought I had covered this problem before here and here, where the topic was whether a property owner had an ethical obligation to divulge that the house in question had been the site of gruesome murders or suicides. The law in most states declares caveat emptor, but that’s only the law. The ethics verdict, in my view (but not everyone’s) is this, which my last comment on the topic, in 2013:
“I understand why a property’s history is a potential litigation magnet if there aren’t limitations on what a seller has to disclose. If a murder or suicide is a material defect, what about a death from natural causes? How about many deaths? The death of a child? A fatal fire or accident? Criminal activity? There are horror movies and thrillers based on houses with all of these and more, with increasing numbers of silly TV reality shows reinforcing our primal fears and superstitions about haunted homes and evil energies left behind at the scenes of tragedies. Rather than draw arbitrary lines, the courts and law have generally chosen to say, “If this stuff matters to you, then research it yourself or ask about it directly.” That’s reasonable….
“A seller not disclosing is still unethical, however. The seller and his realtor [who sold a murder house to unsuspected purchasers] knew that the information would make the house less desirable to a substantial number of people, so the Golden Rule directive was plain: they would have wanted to know, were they in the potential buyer’s position. The seller knew this for certain, since he did know, and because he knew, was able to get the property for a lower price. Yet he withheld the information anyway, so he could get a higher sales price. If that isn’t unethical, I don’t know what else to call it.”
Recently, however, the fun, smart and peculiar “Law and the Multiverse” site delved into the slightly different issue of the sale of a haunted house.. (The inspiration was a letter from a reader asking about Andrew Lloyd Webber’s fictional owners of the opera house in “Phantom of the Opera.”). Attorney James Daily revealed that when it comes to haunted houses, rather than nearly those with unpleasant histories, law and ethics (as I see them) converge.
A case in New York, Stambovsky v. Ackley, 169 A.D.2d 254 (1991) dealt with a plaintiff, Ackley, who had purchased a home in the village of Nyack, a small suburb of New York City, near Sleepy Hollow of Headless Horseman fame. The house had a well-established reputation in the community as a haunted house,but no one enlightened the out-of-town buyer about that fact until after he owned the place lock, stock, barrel and ghosts. The Ackleys sued to rescind the contract of sale, arguing that the seller had an obligation to reveal the house’s haunted status, so Mr. Ackley wouldn’t worry about his wife waking up in the middle of the night and standing by the bed staring at him for hours as he slept. (Actually, the case occurred before “Paranormal Activity,” so he probably wasn’t worried about that.)
In an opinion famous in law schools for its relentless puns, the court upheld the suit, holding that since the seller had, while he owned the home, encouraged, publicized and profited from the legend in the region that the house was the locale of supernatural doings, the house was “haunted as a matter of law”:
“From the perspective of a person in the position of plaintiff herein, a very practical problem arises with respect to the discovery of a paranormal phenomenon: “Who you gonna’ call?” as a title song to the movie “Ghostbusters” asks. Applying the strict rule of caveat emptor to a contract involving a house possessed by poltergeists conjures up visions of a psychic or medium routinely accompanying the structural engineer and Terminix man on an inspection of every home subject to a contract of sale. It portends that the prudent attorney will establish an escrow account lest the subject of the transaction come back to haunt him and his client — or pray that his malpractice insurance coverage extends to supernatural disasters. In the interest of avoiding such untenable consequences, the notion that a haunting is a condition which can and should be ascertained upon reasonable inspection of the premises is a hobgoblin which should be exorcised from the body of legal precedent and laid quietly to rest….in the case at bar, defendant seller deliberately fostered the public belief that her home was possessed. Having undertaken to inform the public-at-large, to whom she has no legal relationship, about the supernatural occurrences on her property, she may be said to owe no less a duty to her contract vendee. It has been remarked that the occasional modern cases which permit a seller to take unfair advantage of a buyer’s ignorance so long as he is not actively misled are “singularly unappetizing” (Prosser, Torts § 106, at 696 [4th ed 1971]). Where, as here, the seller not only takes unfair advantage of the buyer’s ignorance but has created and perpetuated a condition about which he is unlikely to even inquire, enforcement of the contract (in whole or in part) is offensive to the court’s sense of equity. Application of the remedy of rescission, within the bounds of the narrow exception to the doctrine of caveat emptor set forth herein, is entirely appropriate to relieve the unwitting purchaser from the consequences of a most unnatural bargain.”
“Equity,” in law, is the equivilent of justice and fairness: ethics, in practical terms. So while the law and ethics are at odds where a mere unsettling history is a home’s undisclosed flaw, when ghosts (or demons, presumably) are the problem and everyone knows about them except the new buyer, the law and ethics are in agreement.
The seller has a duty to disclose.
Facts: Law and the Multiverse